From: Tom [mailto:Tsarno@webbinsagency.com] 

Sent: Thursday, February 03, 2011 10:13 AM 

To: EBSA, E-ORI - EBSA 

Subject: Definition of Fiduciary Proposed Rule

To Whom it may concern, 

Webb Insurance Agency, Inc. sponsors an employee stock ownership plan, or ESOP. Our ESOP 

makes 

employees of Webb Insurance Agency, Inc beneficial owners of our stock. 

Federal law requires that every year, as a privately-held company, not traded on a public stock 

exchange, that Webb Insurance Agency, Inc. pays to have a qualified, independent valuator 

establish the value of 

the employee’s shares in the ESOP. 

We learned that on October 22, 2010, the Department of Labor issued a proposed regulation to 

reverse a 34 year old policy, honored by both Republican and Democratic Administrations, that 

would 

automatically make any valuator of ESOP shares a fiduciary to our ESOP. (Current law clearly 

makes the 

trustee a fiduciary, and company personnel with powers over the ESOP fiduciaries.) 

This proposal will significantly increase the cost of establishing and maintaining an ESOP. 

If the valuation provider is a fiduciary, she or he will have to purchase fiduciary insurance, many 

will 

withdraw providing valuation services to an ESOP company like Webb Insurance Agency, Inc., 

and be subject to 

aggressive, needless lawsuits. In addition, if the DOL proposal is finalized, it would create a 

contradiction. Internal Revenue Code §401(a)(28)(c) mandates the appraiser of private company 

ESOP 

stock be independent. If a valuator becomes a fiduciary to the ESOP, he or she would not be 

independent. 

But we do not write to protect the valuation profession; we write to protect our ESOP, and our 

employee owners. 

If the DOL proposal becomes effective, it would diminish our profits, which means lower share 

value for employee owners, and thus less retirement savings. It would hinder any plans for 

expansion, 

stop the company from acquiring another company, and would increase the cost of transactions 

for the 

company. 

The biggest concern is the way the proposal is written, and its impact makes all private ESOP 

companies, both our trustees and company fiduciaries sitting ducks for lawsuits. 

Candidly, the proposal will cause a reassessment of whether successful ESOP programs should 

continue. 
We respectfully ask that you consider expressing opposition and/or doubts about the DOL 

attack on private company ESOPs. 

Sincerely, 

Thomas A. Sarno, CPCU

Vice President / Finance & ESOP Trustee

 

WEBB INSURANCE AGENCY, INC.

212 W. High St. 

P.O. Box 539

Lima, OH 45801

(419) 228-3211

(800) 727-1113

Fax: (419) 229-7894

Email: tsarno@webbinsagency.com

 

 

 NOTICE: Please be advised that Coverage cannot be bound via E-mail Transmission. 

This e-mail, including attachments, may include confidential and/or proprietary information and may be used 

only by the person or entity to which it is address. If the reader of this e-mail is not the intended recipient or his 

or her authorized agent, the reader is hereby notified that any dissemination, distribution or copying of this email is prohibited. If you have received this e-mail in error, please notify the sender by replying to this message 

and delete this e-mail immediately.